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U.S. markets down again

NEW YORK, Nov. 12 (UPI) -- U.S. stock indexes slid early Wednesday in a week that fell from positive territory midday Monday and has yet to work its way out of the red.

Gasoline prices have been the one bright spot in the economic picture recently.

"Look at it this way," Quincy Krosby, chief investment strategist at the Hartford told The Wall Street Journal. "At $2 a gallon you are seeing essentially a 'stimulus package' of over $250 billion for the U.S. consumer."

Consumers, however, have not risen to the occasion, or can't. Automobile sales fell 32 percent in the third quarter. Best Buy reported "rapid, seismic changes in consumer behavior," and trimmed its projections for 2009, the Journal reported.

In midmorning trading Wednesday, the Dow Jones industrial average was down 141.06 points, or 1.62 percent, to 8,552.90. The Standard and Poor's 500 fell 1.62 percent, 14.54 points, to 884.41. The Nasdaq composite index fell 21.17 points, 1.31 percent, to 1,560.17.

The benchmark 10-year U.S. Treasury bond rose 16 /32 to yield 3.701 percent.

The euro rose to $1.2536, compared to $1.2528 Tuesday. Against the Japanese yen, the U.S. dollar fell to 96.55 yen, from 97.89 yen Tuesday.

In Tokyo, the Nikkei average fell 1.29 percent, 113.79 points, to 8,695.51.

Pelosi pushes for more auto industry aid

WASHINGTON, Nov. 12 (UPI) -- U.S. House of Representatives Speaker Nancy Pelosi called for legislation that would enable U.S. automakers to participate in the $700 billion federal bailout.

In a statement released Tuesday, Pelosi requested the House Financial Services Committee, led by Rep. Barney Frank, D-Mass., "craft legislation to provide emergency and limited financial assistance to the automobile industry under the Emergency Economic Stabilization Act."

A lame-duck session to pass the measure could be convened next week, with Democrats pushing the issue on a reluctant White House.

"We'll have to see what Speaker Pelosi is proposing. There are no details, so there's nothing to react to," White House spokesman Tony Fratto said Tuesday in a statement.

"Of course, it's strange that congressional Democrats would choose to ignore the $25 billion program they actually created to assist the automakers. That would be a better place to start," Fratto said.

Senate Democratic leader Harry Reid, D-Nev., also pushed for a new bill.

U.S. consumer spending poised for downturn

WASHINGTON, Nov. 12 (UPI) -- Recent data indicate the U.S. consumer, responsible for two-thirds of the U.S. economy, may cut spending sharply through 2009.

Automobile sales plummeted in October falling 32 percent in the third quarter, The New York Times reported Wednesday. Major electronics retailer Circuit City filed for Chapter 11 bankruptcy this month and income growth is now lagging behind inflation, the Times said.

The employment picture also points to the possibility spending may fall next year.

The job market, "already appears to be in worse shape than at any time during the recessions of the early 1990s or early 2000s," Lawrence Katz, a former Labor Department chief economist told the Times.

On balance, an economic stimulus package of $400 billion would be required to make up for a 1 percent drop in spending. While a stimulus bill may be forthcoming, current discussions in Washington point to a possible stimulus package of about $150 billion.

U.S. families spent 91 percent of their income from the 1950s to the 1980s, saving the rest, the Times said. In recent years, spending has increased to 99 percent of household incomes, an indication that spending less may be overdue.

Mortgage plan falls short, Bair says

WASHINGTON, Nov. 12 (UPI) -- Federal Deposit Insurance Corp. chairman Sheila Bair said the U.S. Treasury's mortgage modification program unveiled Tuesday doesn't go far enough.

"This is a step in the right direction but falls short of what is needed to achieve widescale modifications of distressed mortgages," Bair said.

The plan, administered by the Federal Home Loan Mortgage Corp. and the Federal National Mortgage Association, could rescue 400,000 homeowners from foreclosure, the Treasury said.

Freddie Mac and Fannie Mae own or guarantee 58 percent of all U.S. single-family mortgages. But only 20 percent of those are in danger of foreclosure, CNNMoney reported Wednesday.

The plan mandates the companies track down delinquent homeowners. Those who participate would be offered mortgage payments of 38 percent of their monthly household income. Some payment on principle can be deferred and interest rates could be reduced to 3 percent for five years with increases scheduled until the rate reaches the original rate or the market rate, whichever is lower, CNNMoney said.

"Most foreclosures are happening on subprime loans that Fannie and Freddie don't control," said Eric Stein, senior vice president at the Center for Responsible Lending.

"More is still needed to address foreclosures on these mortgages," he said.